Announced Actions for December 30, 2003

December 30, 2003

For Your Information

Filing of Commission complaint:

The Commission has approved the filing of a complaint against Vinyard Enterprises, Inc., d/b/a Comfort Castle Enterprises, a Florida corporation; Sunshine Advertising & Marketing, Inc., d/b/a Dynamic Data Services, a Florida Corporation; Ray A. Thompson, as an individual and officer of one or more of the above-mentioned companies, also d/b/a Dynamic Data Services, Dectura Direct Service, and D.D. Service; Judith Livingston, as an individual d/b/a Direct Business Services and Dynamic Data; and Jason Lunan, as an individual and d/b/a Dynamic Data Express and Comfort Castle Associates.

According to the complaint, brought as part of “Operation Pushing the Envelope,” since at least August 1997, the defendants, or people acting on their behalf, set up numerous post office boxes and commercial mailboxes in the greater Miami area, through which they sold work-at-home mailing opportunities to consumers through fliers delivered to their houses. The business opportunity allegedly consisted of two or more “tiers,” with instructions either to recruit a second or third generation of purchasers using fliers or marketing the defendants’ book reports on how to make money from home.

According to the defendants’ allegedly false literature, consumers could earn “$5,000 Weekly!” simply folding fliers, which they termed “catalogs.” Consumers could supposedly make “$1,000 to $5,000 Every Week,” including $10 for each catalog they mailed, with “free postage...free catalog...no newspaper ads...no bulletin board ads...[and] Paychecks mailed to you every Wednesday.” The defendants allegedly also claimed that the paycheck was “One hundred percent GUARANTEED!,” and that consumers would “be paid in advance before you are required to mail any of the reports.” For this “opportunity,” or a related booklet-stapling work-at-home plan, consumers paid between $20 and $139, plus shipping and handling. In its complaint, the Commission is seeking injunctive relief and any redress the court deems appropriate for provision to defrauded consumers.

The Commission vote to issue the complaint was 5-0. The complaint filed on December 10, 2003, in U.S. District Court for the District of Southern District of Florida. The FTC has requested and received a temporary restraining order against the defendants in this matter, and has filed for a preliminary injunction. (FTC File No. 032-3195; staff contact is Colleen B. Robbins, Bureau of Consumer Protection, 202-326-2548; see related press release dated December 16, 2003.)

The FTC has modified its policy regarding the presumptive disclosure of privileged materials that relate to closed matters. Freedom of Information Act (FOIA) Exemption 5 shields “inter-agency and intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency.” 5 U.S.C. § 552(b)(5). Specifically, this refers to materials that would be protected by the deliberative process, work product, attorney-client or other statutory or common law privilege. The Commission, however, has the ability to waive the exemption and release otherwise privileged material. Under the new policy, the Commission will release deliberative material relating to matters that have been closed for ten years, absent a compelling reason to the contrary. Previously, the Commission applied a rebuttable presumption favoring release of deliberative material relating to matters that have been closed for between three and 10 years.

The Commission has always been committed to discharging its responsibilities in an atmosphere of openness and accountability, while protecting internal records that enable the agency to effectively carry out its law enforcement mission. It believes that discretionary release of otherwise exempt material can, and should, be made at any time, consistent with its law enforcement needs.

The Commission has noted that very few privileged materials can be safely released soon after they are generated. Often the materials are so similar to deliberations in ongoing matters that the release would jeopardize those matters. In addition, the Commission has consulted with several other federal agencies and determined that the new policy is consistent with the positions of other agencies.

Under the modified policy, the Commission remains free to make a discretionary release of privileged documents at any time, and its rules continue to allow a requesting party to make a case in favor of discretionary release should circumstances warrant. The modified rule, therefore, will not necessarily preclude the Commission from continuing to make discretionary disclosures of documents from cases closed less than ten years where the circumstances warrant. In accordance with this modified policy, the Commission will revise Chapter 15.4.3.4.1 of the Operating Manual to read:

15.4.3.4.1 Discretionary Release of Internal Documents

Absent a compelling reason for withholding, most information protected solely by exemption 5 in a file closed over ten years will be released.

Nevertheless, the following retain a presumption against release regardless of age: 1) documents prepared or annotated by individual Commissioners and their staffs; 2) General Counsel advice in response to specific requests; 3) sensitive personnel documents; and 4) communications from an agency which the other agency would object to disclosing. The presumption favoring release does not apply to portions of internal documents that are protected by other exemptions.

Following a public comment period, the Commission has approved a final consent order in the matter concerning GenCorp Inc.’s acquisition of certain assets of Atlantic Research Corp., a subsidiary of Sequa Corporation, and a letter responding to the commentor of record. The Commission vote to approve the final consent order and letter was 5-0. (FTC File No. 031-0152, Docket No. C-4099; staff contact is Jonathan S. Klarfeld, Bureau of Competition, 202-326-3187; see press release dated October 15, 2003.)

Copies of the documents mentioned in this release are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.